Moody’ to Upgrade Mauritius Baa2 Rating

It also placed under review for possible upgrade Mauritius’ foreign currency ceilings for bonds and deposits, which are currently rated Baa1 and Baa2, respectively.

Moody’s rating review will focus on the Mauritian economy’s ability to remain resilient to external shocks; its sustainability of positive trends in the country’s debt dynamics; and the country’s ability to maintain favourable external metrics, despite the emergence of continual current account deficits.

Firstly, since European Union accounts for two thirds of Mauritius’s export market, Moody’s noted that the country is significantly exposed to the crisis in Europe and the current global slowdown.

The rating agency’s review will therefore monitor whether Mauritius will remain resilient to a protracted slowdown in Europe.

Secondly, the rating agency’s review will focus on whether the improvements in Mauritius’s debt dynamics are sustainable over the medium term and whether debt metrics are likely to converge towards the levels of Baa1-rated peers.

On the one hand, Moody’s views positively the Mauritian government’s commitment, as stated in the amended 2008 Debt Management Act, to lower public sector debt to below 50 per cent of GDP by 2018 compared to 58 per cent at the end of 2011.

On the other hand, both Mauritius’s affordability ratio and current debt stock still compare unfavourably with that of Baa-rated peer countries.

Thirdly, an important aspect will be Mauritius’s ability to maintain favourable external metrics, despite the ongoing current account deficits.

Total external debt has been rising moderately in recent years, with increased government borrowing from multilateral development banks.